India eyes $11bn on public shareholding sale

The Indian government could raise about $11 billion over the next three-years by raising the public float of its 36 state-owned companies, whose public shareholdings are under 25%.

share

anonymous

2014-06-20T02:10:00+0100

Source: Bloomberg

According to the chairman of Securities and Exchange Board of India, companies will need to increase their public float to at least 25% from 10% within three-years.

This rule kicked in for the private sector companies in last June.

The measure is part of a reform to attract more foreign investments and revive economic growth through various industries.

There will also be new requirements for research analysts to be regulated to help boost transparency and disclosure standards.

There has already been a run up with investor’s interest this year, partly boosted by the landslide election victory by Prime Minister, Narendra Modi. Investors have bid up stocks such as Coal India, which currently enjoys a monopoly, and sending its share price to a record high earlier this month.

So far, local equities have benefited from an inflow of $9.9 billion from overseas funds, according to Bloomberg data, which was the highest amongst the eight markets it tracks.

However in the interim, investor sentiment will be weighed down by concerns over India’s economy, which is currently facing a five-month high inflation rate and a widening budget deficit. Efforts to jumpstart the economy will be made tougher by weak summer monsoon rains that threaten to hike food and fuel prices.

What investors will be watching out for next is the government’s first budget by Finance Minister, Arun Jaitley, this is expected to be delivered in the second week of July.

Ahead of the Singapore open

Wall Street was generally positive with the S&P 500 hitting a new record high at 1,959.48 ( +0.1%). The Dow Jones was at 16,921.46 (+0.09%), while NASDAQ slid 0.1% to 4,539.33 after hitting a 14-year high the prior day.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

CFDS are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

The information on this site is not directed at residents of the United States and Belgium, or any particular country outside Switzerland and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.